Without Contraries is no progression. Attraction and Repulsion, Reason and Energy, Love and Hate, are necessary to Human existence.
From these contraries spring what the religious call Good & Evil. Good is the passive that obeys Reason. Evil is the active springing from Energy.
Good is Heaven. Evil is Hell.
Is energy really evil? Is passivity really good? These are qualities which in and of themselves are neither good nor evil. However, if I'm a priest whose megalomania mandates that I control my flock, I would deliberately say so in order to impose guilt upon action and expression. Blake is pointing out the hypocrisy here, and the incompleteness of the Swedenborgian tradition which considers only half the argument.
He goes on to explain that through the "Voice of the Devil" that all religious systems divide the person into souls and bodies, a tradition advanced by the Hebrews, Christians, Muslims, neo-Platonists.
The Devil goes on to say, in one of my favorite lines of all time:
Those who restrain desire, do so because theirs is weak enough to be restrained.
...And in the process of being restrained, it (by degrees) becomes weaker till it becomes a shadow of its original self. Blake goes on to point out that the history of this concept is written by Milton in Paradise Lost and that in the Book of Job, Milton's Messiah (the accuser) is rightly called Satan.
In Job, the Devil points out to God that a good man is good and loves God, if and only if, he is prosperous, for the man who has not, condemns the God who created him. The Devil's accusation is that men are good who are contented with their lives, and evil is merely a product of having not. The man who has not rejects God, as he rejects life.
What Blake is talking about truly, is Reason's war against Desire. From a Buddhist vantage, the vast majority of men don't need the religion of the ascetics. Our lot with desire is indulge and suffer and if we look at this as a terrible bane, then the strategies of the ascetics are necessary. But for most of we can deal with the fact that not every desire is going to be satiated. That's simply the way it works down here. Suck it up and enjoy it, or leave the game completely.
From the devil's perspective, Messiah rejects his own soul, the part of us which is animalistic, the desire for sex, for instance, is deemed Impure.
The Devil's account is, that the Messiah fell and formed a heaven of what he stole from the abyss.
So, good amounts to a rejection of this world in favor of the next world, a world Blake isn't even certain exists. The desire for sex becomes the desire to procreate via manuscripts, the desire itself is not lost, merely re-patterned and directed in a different way. Blake's art, then, is the desire to "deprogram" the way in which we view good and evil, to re-pattern it so that it does not afflict the soul, but frees it from the bonds of its own shame.